Monthly Archives: December 2014

Seller Contract? Buyer BeWare!

As a Realtor telling you this I realize your first thought is you don’t want me to buy for-sale by owner because you lose money.  And yes that is a fact anytime you don’t buy a house through me I don’t gain money.  So very true. Point acknowledged!

I have had an interesting year this year trying to sell a home for a seller that had bought there home for sale by owner a few years ago with very easy to get into seller financing.  They  thought they could do better “on there own” and this is what they got.

They purchased a home for about 35k more than it was worth.  (You should ask your Realtor to run com parables for you) and they got wrote up into a contract that was impossible to get out of.  They got wrote into a 5 year balloon  meaning they needed to pay it off in 5 years.  Well that is good and well if:

1.  The property is finance-able

2.  You do not owe more on it then it is worth.

3.  You have some equity in it at that time and you can get a decent financing deal on it.  Ideally needing to borrow less than 80% of the properties value.  So you can get a good loan on it.

4.  You have the cash or will have and this is a good deal for you

Some sellers will scam

Getting scammed by a seller contract that you can never escape is not pretty!

They hit the 5 year mark with still owing 20k more on it then its worth.  And a property that is hard to finance in the first place if its loan to value was right.  So what is happening to them you ask?  Well there down payment and there 5 years worth of payments is going down the drain.  That seller also made them sign a contract that they were not allowed to rent the property either so after not being able to sell it for more than its worth and not able to rent it out and they can’t finance it because they don’t have another 30k to get that home to a point where they could finance it  he is going to reposes it.  Which by the way this  is the 3rd time he has done that in the last 15 years.  Do you think they got scammed?

He once again is offering it low down rent to own or for sale by owner seller finance and all the other to good to be true options that are out there to take advantage of the unknowing.  The next buyer will have the same terms pay it off in 5 years no renting it etc.  The next ones will also be out the door on there ear.

And don’t get me wrong I am not knocking a seller contract.  But you need to be aware.  What are the terms?   Is it a contract that you can legally ethically get out of down the road.  My sellers on the above transaction were very willing to keep the property and rent it out.  That seller was unwilling to do that because he knew he could do better by repoing it  and starting over.  He had no intentions of letting them create new terms for it.  Even though they could prove that they could not finance it because the appraisal came in way to low he was still unwilling to rewrite terms.  And the fact of the matter is they signed a contract agreeing to his terms.  They had nothing to fall back on.

So you want to consider if it has a balloon where are you going to be 5 years 10 years down the road.  Jobs change, family status changes, life is full of change.  Is it a property that in case of emergency you could take a loan out on?  There are some properties that a bank just will not loan on.  No matter what.  Those properties are going to have to be seller financed to sell.  They could be neat properties but that is the deal.  Are you going to be in a position when you need to sell it that you could carry the paper on it also.  If the answer is NO because you will need the money to move on then you should probably reconsider.  I am an optimist by nature but I truly believe expect the best but plan for the worst.

Are you financially prepared for the worst.  Seems to me usually that the people that can least afford the financial disaster are the most likely to get into one.  Funny how that works.

I’m not sitting here trying to push you to use a Realtor.  i do highly recommend it for your own protection but I know it happens every day that people take on making the biggest investment of there life with no assistance, thinking they are getting a better deal.  Thinking it will save you a commission or save you some extra fees.  Generally speaking if you are a buyer, you can still get the seller to pay the commission to the buyers representative and you end up with someone that is on your team.  Its not a question of you paying more or less.  Sometimes you can’t afford to not pay for the help.  You buy something your trapped in that your going to lose your butt if you have one ounce of a problem that 2 or 3% that it would have cost you for assistance is nothing in comparison.

In my above client example they paid almost 30% more than the property was worth.  They could never have caught up in the 5 years they had to make payments on it.  And they put down a decent down payment they put 10k down.  So my words of advice really be careful.  And make sure you have an escape clause.  That your not upside down and that you could resell it or rent it if you needed to down the road.  Those are the things an experienced agent should be able to help you with.  Your devils advocate per sea.

And I am not saying No to the weird non conforming property that suits your family perfect its good go in with you eyes wide open.  If your credit is a disaster but you need a home and all that is available is an over priced seller financing home thats fine go in with your eyes wide open.  Have a plan.  And know what you might lose and be prepared for that.  We all do things sometimes that we don’t want to do but have to do.  That is fine but know the pros and cons.

I’m here to help you with all your buyer and seller needs.  Please feel free to request help.  Questions and answers are free

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The Grass Really is Greener over The Leach Field

Some days when I think of the Septic systems it always makes you think of Ole Erma Bombeck and that book the grass is always greener over the septic tank.  Well I have come to determine that it might only be greener over the septic tank if its broken and leaking.  But the grass really should be greener over the leach field if the septic tank is working properly.

 The septic tanks job!

The Grass is always greenerThe Grass Really is Greener over the leach Field!

 

I have had the pleasure ( or more directly the nightmare) of living in an older home that was a remodel project from day one.  I will probably write a series on this house as it has been a trial and tribulation that is amazingly unreal.  But I do have to say what doesn’t break you makes you stronger.  Maybe not financially though when it comes to a home.

But the education this home has given me has been a total gift when it comes to dealing with houses.  I really couldn’t have asked for a better educator!

One of the things we really never think of when we buy a home is the health of the septic system.  We have the home inspector check if the drains work and the toilet flushes.  Well all must be well if that is done.  Usually in Idaho we have the septic tank pumped so they hopefully find it and pump it and generally they say all is well and off we toddle into the world of home ownership.  Never totally having a clue if the septic tank is truly doing its job.

The grass is Greener over the leach field

The grass is Greener over the leach field

So in my instance I buy my lovely fixer upper.  And it needs a lot were not even going to touch everything that it needs but lets just say for starters we take care of replacing most of the plumbing.  Change some rooms and put in new plumbing to take care of the new position of some of the conveniences aka new toilet and tub.  So I tend to that and I continue to have “problems”  an occasionally clogged pipe an occasional odor in the house that smells like septic.  Have the plumber come and I chase down having lines snaked out.  Tear out a wall looking to see if they “forgot” a trap when they put in the new pipes.  Have the plumber tell me that a lot of homes with basements have an “odor” that just can’t be cured.

If that thought isn’t enough to just about gag you I don’t know what is.  As there was days that it really stunk!  I carried on with this pattern for about 4 years.  Pump the septic on the advice of a plumber snake out a line here and there open windows to let the stench out at times.  And none of it was ever consistent it wasn’t like it stunk every day or that it clogged all the time I’m talking an occasional here and there just enough to slowly beat you up as a home owner.

Well being an active Real Estate agent and an active blogger on Active Rain I came across a company  Lateral Concepts LLC that was blogging in my area that specialized in looking at septic systems.  I have to be honest I had talked to so many plumbers etc. and No one had recommended a service like this that I was a little skeptical.  So on my last clogging and a you need your septic pumped routine I decided to give this company a call.  As frankly I’m getting to my wit’s end.  I had this tank pumped a year ago.  Its only 2 of us living in the home we can’t be that full of poo.

So we get the tank pumped out as he can’t look at things without the tank pumped down.  And we dig it up as most tanks should have two lids ( LOl I learned something new there) 2nd lid heads to the leach field so you can check on it.  So he checks out my line from the house to the tank.  Were dirty but there is a path to the tank.  So the house can drain.  Then we start on the checking of the leach field.  That is a joke for starters as my older tank does not have a 2nd lid.  Well it does now!  He can get about 6 inches into the leach field with the scope.  Guess what is not working!  There should be many feet of space for that tank to drain.  I am not certain of the exact and I am sure it’s going to be subject in length to your ground and the size of your home.  but lets just say that 6 inches of grime just doesn’t cut it for a leach field.  I had always wondered why my lawn dried out so in the summer LOL.

So Moral to the story I have a new leach field.  They had to come in and dig up a new leach field put me down new piping into the septic tank and head me off into a new direction.  Because Yes the water should skim off the septic tank and go somewhere preferably not back into the house!  If the leach field is working well I was told that I should not have to have that septic tank pumped for at least 4 or 5 years.  Wow isn’t that an amazing thought since its been an annual job for the last 3 years,.  I now have clean outs and spots where you could get a scope down it at any time and be able to check on it.  I truly don’t expect to have a problem with it for a very very long time.

As for now my basement no longer stinks!  Oh you might smell the cat box once in a while but the sewer smell is gone.  Doesn’t burp back on us every time the washing machine runs even the clothes smell better out of my washing machine.  I know that sounds crazy but seriously it is better.  No clogged drains in almost 6 months.  I may not know what to do with myself if that problem goes away for good.

And I just have to say Brad at Lateral Concepts was amazing to deal with.  He orchestrated the whole repair for me.  Recommended the excavator who was amazing!  First person in the trades that I have ever had that showed up when he said he was going to show up and just plain rocked out the job.  I am totally impressed.  If you ever need someone to call for that type of work call or email for his number he is amazing!  Recommended the plumber that did the piping.  Frankly it was done in a long morning.  Wonderful service sometimes out of the stinkiest moments you find a gem.

Learned a lot about pipes this little experience.  I think we all take it for granted that issues like I just got to experience are for the folks that live in the country.  We forget that every time someone parks a car over the line heading to the city sewer or that beautiful tree in the front yard wraps its roots around the line that any little tap or stranglehold on those pipes can at sometime create an issue or cause damage.

Talking to Brad he reminds me that it’s not just for the older homes that even some of the newer homes have issues.  I know even talking to one of the plumbers that I had out over the years.  He tells me oh Yea a lot of the homes in this area have this problem.  it’s just because you have a basement.  Maybe it’s because the leach field is clogged, or maybe it’s not draining right.  Ground settles what if the house does and the leach field doesn’t .  One thing I have learned is water does not run up hill.  And I am 6 months out now and low and behold the odor has not returned to my “basement”.  Fancy that!

So moral of the story is the grass really is greener over the leach field that is working.  And if that septic needs pumped more than every few years the problem really is not the septic.  It is just the symptom to a much larger problem.